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Sims v. Bank of America Corp.

February 19, 2008


The opinion of the court was delivered by: Sifton, Senior Judge


Plaintiff Justine Sims commenced this class action complaint on behalf of herself and similarly situated individuals whose bank accounts containing only legally exempt electronically deposited Supplemental Security Income ("SSI") benefits had been or will be restrained pursuant to New York Civil Practice Law and Rules § 5222. The complaint names the following defendants: Bank of America Corporation; Mel S. Harris & Associates, LLC; Honorable Judith S. Kaye, as Chief Judicial Officer of the State of New York; Honorable Jonathan Lippman, as Chief Administrative Judge of the Courts of the State of New York; and Diana L. Taylor, as New York State Superintendent of Banks (collectively "Defendants"). Plaintiff seeks a declaratory judgment stating that restraining these accounts pursuant to N.Y. C.P.L.R. § 5222 violates (1) 42 U.S.C. § 1383(d)(1); (2) the Due Process Clause of the Fourteenth Amendment to the United States Constitution, U.S. Const. amend. XIV; (3) the Supremacy Clause of the United States Constitution, U.S. Const. art. VI; and (4) the Due Process Clause of the New York State Constitution, N.Y. Const. art. I, § 6, in so far as it requires banks to restrain judgment debtors' bank accounts that contain only electronically deposited legally exempt SSI benefits. Plaintiff also seeks an order enjoining all Defendants from issuing restraining notices and implementing or enforcing N.Y. C.P.L.R. § 5222 unless it is changed to ensure that bank accounts containing only electronically deposited legally exempt SSI monies are not restrained. Presently before the Court is Plaintiff's motion for certification of a class, along with the parties' joint proposed "Stipulation and Order Settling Class Action Certification Motion." For the reasons set forth below, the motion is granted, and the proposed class, as redefined in this opinion, is certified. In addition, plaintiff's counsel is certified as class counsel.


The following facts are taken from the parties' submissions in connection with this motion. For purpose of this motion, they are not disputed.

Plaintiff Justine Sims

Ms. Sims is a 64 year old woman with a degenerative spinal disease which prevents her for standing for more than five minutes at a time. (Compl. ¶ 57.) Medicaid pays for a home attendant to help Ms. Sims with her daily activities. (Id.) Since 1995, plaintiff has received SSI benefits. (Id. ¶ 58.) At the time of the complaint, she was receiving SSI benefits in the amount of $690 per month in addition to $119 per month in food stamps. (Id.) These were the only sources of income for Ms. Sims. (Id.) Plaintiff's SSI benefits were electronically deposited into her savings account at Bank of America on or around the first day of each month by the Social Security Administration ("SSA"). (Id. ¶¶ 60, 61.) She has no assets or cash other than the SSI monies she receives each month, and these monies are the only deposits to plaintiff's bank account. (Id. ¶¶ 58, 62.)

On November 1, 2006, the SSA deposited plaintiff's SSI monies for the month of November into her account at Bank of America. (Id. ¶ 81.) On November 1, 2006, the date when her SSI benefits should have been electronically deposited, Ms. Sims tried to withdraw money from her Bank of America bank account via an ATM, but could not. (Id. ¶ 63.) Ms. Sims contacted Bank of America that day to see why she could not withdraw any money. The representative at Bank of America told her that her bank account was frozen because she owed money to Sears which had filed a lien restraining release of money from the account. (Id. ¶ 64.) Plaintiff Sims alleges that at the time Bank of America froze her account, it "knew or should have known that Ms. Sims's bank account contained only electronically deposited exempt SSI benefits," because the SSI deposits have a code embedded, "SUPP SEC," which informs the bank that the monies being deposited are, in fact, SSI monies. (Id. ¶¶ 51-53, 80.) The representative also told plaintiff that Sears had retained defendant Mel Harris & Associates, LLC, as its counsel to collect the debt. (Id.)

Ms. Simms then contacted defendant Harris's office to inquire as to why her bank account was frozen. (Id. ¶ 65.) Plaintiff was then informed that defendant Harris put a lien on her account because she hadn't paid her Sears bill. (Id. ¶ 65.)

On November 8, 2006, Ms. Sims commenced the present action. Thereafter, plaintiff filed a voluntarily stipulation dismissing all claims against Defendant Taylor. Notices of Appearance were filed on behalf of all defendants except Defendant Mel S. Harris & Associates, LLC. Counsel for Defendant Mel S. Harris & Associates, LLC, did, however, appear before the magistrate judge on two occasions. Defendants Bank of America Corporation, Honorable Judith S. Kaye and Honorable Jonathan Lippman requested numerous enlargements of time to respond to the complaint, all of which were granted, and the last of which expired on June 19, 2007. Since the argument of this motion, answers have been filed by all defendants. Thereafter, on November 13, 2007, defendants and plaintiff jointly submitted a proposed "Stipulation and Order Settling Class Action Certification Motion."

Statutory and Regulatory History

Social Security

The Social Security Administration ("SSA") administers the SSI program, 42 U.S.C. § 1381 et seq., which provides benefits to indigent persons who are aged, blind or disabled. (Compl. ¶ 18.)

42 U.S.C. § 1383(d)(1) was enacted to ensure that SSI benefits are available to meet the basic needs of the plan's beneficiaries. (Compl. ¶ 20.) § 1383(d)(1) incorporates 42 U.S.C. § 407 which states that, "none of the monies paid or payable under this subchapter [42 U.S.C. § 401 et seq.] shall be subject to execution, levy, attachments, garnishment or other legal process or to the operation of any bankruptcy or insolvency law." 42 U.S.C. § 407(a). SSI benefit recipients were required to receive their payments electronically beginning January 2, 1999. 31 C.F.R. § 208.3.

N.Y. C.P.L.R. § 5222

N.Y. C.P.L.R. § 5222 allows a judgment creditor to enforce a money judgment by freezing up to twice the amount of the judgment in a bank account of the judgment debtor. The judgment creditor's attorney, acting as an officer of the court, is authorized to serve a restraining notice on a bank or any other entity holding the judgment debtor's funds. N.Y. C.P.L.R. § 5222(a). Since 2000, judgment creditors' attorneys have been able to electronically serve restraining notices on banks, provided notice is also properly given to the judgment debtor.

N.Y. C.P.L.R. § 5222(g). While the restraint is in effect, no checks can be cashed or cleared against the restrained account, nor can funds be withdrawn. N.Y. C.P.L.R. § 5222. A judgment creditor's who fails to restrain or otherwise prevent transfer of the funds in the frozen account can be held in contempt of court. N.Y. C.P.L.R. §§ 5222(a), 5251. The judgment debtor's account remains frozen until the judgment debtor agrees to pay, the judgment creditor engages a marshal or sheriff to seize the debtor's funds or the judgment creditor agrees to release the money. N.Y. C.P.L.R. § 5222(b). Within four days of serving the notice of restraint on a bank, the judgment creditor must mail or personally deliver a copy of the notice of restraint in addition to a "notice to judgment debtor" to the judgment debtor. N.Y. C.P.L.R. § 5222(d). The "notice to judgment debtor" gives notice to the judgment debtor that the funds have been frozen and that certain property, including SSI benefits, are exempt from collection. N.Y. C.P.L.R. §§ 5222(d), (e). The "notice to judgment debtor" states that:

[m]oney or property belonging to you may have been taken or held in order to satisfy a judgment or order that has been entered against may be able to get your money back. State and federal laws prevent certain money or property from being taken to satisfy judgments or orders. Such money is said to be "exempt". The following is a partial list of money which may be exempt: 1. Supplemental security income, (SSI).... If you think that any of your money that has been taken or held is exempt, you must act promptly because the money may be applied to the judgment or order. If you claim that any of your money that has been taken or held is exempt, you may contact the person sending this notice.

N.Y. C.P.L.R. § 5222(e). In order to get a restraint on an account lifted, a judgment debtor either must commence a special proceeding or file a notice of motion with the court. N.Y. C.P.L.R. §§ 5239, 5240.

The Settlement Class

Approximately 633,473 residents of New York State received SSI benefits in 2005, and approximately 640,598 residents received SSI benefits in 2006. Social Security Administration, "SSI Recipients by State and County, 2005," New York, Table 3, released June, 2006, available at; Social Security Administration, "SSI Recipients by State and County, 2006," New York, Table 3, released May, 2007, available at As of October, 2007, 227,100 SSI recipients in New York State were still receiving SSI checks each month, while approximately 406,373 recipients received their SSI monies by electronic deposit. Social Security Administration, "Monthly Social Security and SSI Payments by State," available at ...

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